As your business grows, it becomes more and more important to review the company’s performance to date and subsequently plan on how to succeed ahead. Here is the best way to analyze the business activities and set up for success.
Preparing for the future by revisiting the past performance
Both new and established companies spend a lot of time and money on analyzing daily actions and focusing on reducing daily costs to make higher profits. However, what most businesses overlook is a long-term or sustainable analysis.
Strategic analysis of a business is key to survival. As companies grow, its employee base grows, its departments increase, its operations grow, and its cost and maintenance requirements expand.
A detailed review of the company’s operations on a quarterly, bi-annual, or annual basis becomes increasingly important and rewarding to assess whether:
- the business is performing well
- the company is getting the most out of the business or making the most of market opportunities
- the business plan is outdated or needs updating
- the business is moving in alignment with organizational goals
- the business is ready to move to the next level
Therefore, only an accurate method of analysis will help you reap the benefits that are associated with reviewing the performance of a business. Here are a few ways to analyze your business activities:
#1. ASSESS YOUR CORE ACTIVITIES
Most business struggle on where to start the business analysis. A great starting point is to assess the company’s core offerings and activities associated.
It is important to include a detailed research on advancements in the field, any improvements that have been or can be incorporated and where your core activities stand on a competitive level.
#2. ASSESS YOUR BUSINESS EFFICIENCY
As the company moves from getting the business going to concentrating on growing and developing it. It becomes important to align methods and strategies with the growth vision. Short-term strategies can cost time and money in the long run. That is why it becomes important to move from short-term strategies to long-term sustainability strategies.
#3. REVIEW YOUR FINANCIAL POSITION
When it comes to a company’s success, developing and implementing a sound financial and management system is vital. Updating your business plan includes updating your financial strategies, which can only be done by understanding the current financial position of the company.
When reviewing your finances, consider evaluating the following aspects:
Cash flow - this is the balance of money flowing in and out of your business. Make sure that your forecast is regularly reviewed and updated.
Working capital – this refers to the cash-in-hand for conducting day-to-day business activities. As your business grows, ensure that you have adequate working capital.
Cost base - keep your costs under constant review. Make sure that your costs are covered in your sale price – but don’t overcharge and under-deliver.
Borrowing - what is the position of any lines of credit or loans? Are there more appropriate or cheaper forms of finance you could use?
Growth - do you have plans in place to adapt your financing to accommodate your business’ changing needs and growth?
#4. CONDUCT A COMPETITOR ANALYSIS
Gathering more information on the company’s competitors may cost time, money and effort, but this becomes a key aspect when it comes to staying ahead in the game.
Conduct a SWOT (Strengths, Weaknesses, Opportunities, and Threats) Analysis for all the major competitors. Always remember: You never make a strategy based on the weaknesses of your competitors.
#5. CONDUCT A CUSTOMER AND MARKET ANALYSIS
When you’re reviewing your business’ performance, you’ll need to assess your customer base and market positioning as a key part of the process. You should update your marketing plan at least as often as your business plan. For this, it is always best to gather current market data, forecasted data and then conducting a SWOT (Strengths, Weaknesses, Opportunities, and Threats) Analysis and an STP (Segmenting, Targeting and Positioning) Analysis for your own business.
Once you have this information, ask yourself these 3 questions:
- Where is the business now?
- Where is it going?
- How is it going to get there?
The premise of growth with sustained profitability, improving operating efficiency, conversion of profits into cash and then using this cash for future growth, remains the same for all businesses. However, the implementation of the various strategies and analysis of the results are what differentiate the outcomes of all businesses.